TXU buyout short-circuits as risk of bond default rises

It could be lights out for the biggest buyout in history. The $43.2 billion purchase of TXU by two private equity groups in 2007 looked brilliant at the time. Natural gas prices were expected to rise, driving wholesale power prices higher. That was especially good for TXU, which generates much of its electricity from lower-priced coal.

TXU bondholders aren’t likely to be as lucky.What sounded like a good deal has failed to live up to the promises. In that sense, bondholders now know consumers have felt about deregulation for the past decade.